Last night we went along to hear Malcolm Gladwell give a talk as part of his tour for his new book – ‘What the Dog Saw’. The theme of the popular author of works such as ‘Blink’ was on Serendipity, which I believe is the core subject of his latest book.
Whilst his stature as an author is certainly recognised, Gladwell did not impress me last night. Sure, he gave a captivating delivery on the serious subject of cancer-beating drug research development, but I read through his account of over a decade to be more likely a chance encounter at a cocktail party a year or so giving him an idea for his next bestseller. Call my a cynic if you will, but I just thought the link to the story and to his core theme of serendipity was a bit too thin for my liking.
But it did remind me of past readings on ‘Cultural Serendipity’ and a case I penned with Newfoundlander, Blair Winsor – back in 2003 for the Scorrish Institute for Enterprise, when we were both based in Napier Edinburgh University’s Centre for Entrepreneurship.
This story of 3M that here follows offers a rich insight into an explicitly innovative and creative company with culture and management structures to complement and support. It promote an understanding of innovation & creativity in enterprising organizations, and of the human and organizational barriers to innovation and enterprise development:
In 1973, 3M scientist Art Fry was trying to mark his place in his church choir hymnbook with bits of paper that kept falling out. As he did so, he remembered attending a presentation from colleagues describing a “failed” adhesive technology – developed in 1968 by research scientist Dr. Spence Silver who was looking for ways to improve the adhesives that 3M used in its tapes.
Silver had found an adhesive shaped like tiny spheres about the diameter of a paper fibre. The spheres were very sticky individually, but because they made only intermittent contact, collectively they did not stick very strongly. Silver was convinced that there were good applications the adhesive somewhere in 3M. For 5 years, with the support of his manager, he had presented the technology to colleagues around the company.
Fry, wondered whether this failed adhesive could be used to temporarily mark page and working on his own time, he developed a temporary bookmark using the adhesive. However, he had a couple of problems: When he took the prototype to marketing they weren’t interested – the market for bookmarks was too small! When he took it to engineering and production, they told him there would be considerable processing measurement, and coating difficulties and production would create a lot of waste.
Fry’s response to the engineering and production people was, “Really, that is great news! If it were easy, then anyone could do it. If it really is as tough as you say, then 3M is the company that can do it.”
The marketing department took a little more work. Fry came up with other uses – notepaper – marketing still wasn’t interested. Who would want to pay for something that would replace scrap paper? Undaunted Fry passed out free samples to staff around the company. He made sure to give some to the administrative assistants of key executives. This created internal demand and repeat orders. Around the same time, Geoff Nickolson – Silver’s manager, convinced Joe Ramey, the division vice president, to come with him to Richmond, Virginia, and walk up and down the streets on “cold” calls to see if they could sell the product. They did. These efforts overcame the doubts from the marketing department.
As a result, in 1981 – one year after its introduction, Post-it® Notes were named the company’s Outstanding New Product, and Fry was named a 3M corporate scientist in 1986. Today they remain an office staple and generates over US$ 100 million in sales.
Background on 3M
3M stands for Minnesota Mining and Manufacturing, and the company started in 1902 as a somewhat of a mistake. It was established to mine a material – corundum, for sandpaper – but unfortunately it wasn’t corundum. After changing to a sandpaper maker it wasn’t until 1916 that they made their first profit (and only one of the first investors was a alive and invested long enough to see this profit).
Today the company is regularly ranked amongst the top 10 US companies in patents granted, and generates some US$16 billion in annual revenue with market capitalization of around US$46 billion. 3M’s product portfolio includes many infamous products and brands, including: Wet dry sandpaper, masking tape, Scotchlite reflective sheeting, Scotchgard products, overhead projectors, Post-it notes, and fibre optic cable.
The performance of 3M is very important: January 2003 and traders the world over eagerly await the publication of 3Ms interim results as a key indicator as to the health of the US economy. The health and performance of 3M was to be seen as an indication of whether the US economy was in recession or recovery.
In 1907 William McKnight joined 3M and eventually became CEO. He instilled desire for quality – as a salesman he had become tired of selling poor quality products to customers, listening to the customer – “finding the smokestacks”, in 3M speak, basic HR philosophy and curiosity/innovation.
This HR philosophy can be summed up in a statement made in 1948:
“As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women to whom we delegate authority and responsibility, if they are good people, are going to want to do their jobs in their own way.
“Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it undertakes to tell those in authority exactly how they must do their jobs.
“Management that is destructively critical when mistakes are made kills initiative. And it’s essential that we have many people with initiative if we are to continue to grow.”
In 1921 McKnight hired engineer Richard Carlton to work in the quality lab. Eventually becoming CEO of 3M himself, Carlton preached the importance of R&D and became well known for his receptivity to almost any idea and encouraged creative thinking.
These two men crested the 3M ethos that still pervades the company today. It is characterized by: almost 100 hundred years of innovation, created whole new product categories; investing more than $1 billion (approximately 7% of revenue) in R&D annually, and with circa 7000 or 10% of employees are in full-time R&D; 30% of sales coming from products new to the market in the last 4 years.
3M Creativity & Innovation
Much of 3M’s ethos for and cultivation of innovation and creativity can be attributed to multiple, mutually supporting “layers”: At layer 1, the primary concern is the 3M culture. The official vision statement is “to be the most innovative enterprise in the world”, and 3M’s basic definition is: “new ideas +action or implementation which results in an improvement, gain, or profit”. 3M has also coined the word “inventorpreneur” for those who invent and implement. The culture encourages stubborn persistence amongst employees to accept and promote their ideas – “do your own thing”. The culture is taught and conveyed through stories and myth about 3M inventorpreneurs – supported by initiatives such as 3M Global Ambassador for Innovation, and the Tech Forum –a volunteer organization with administrative support, which sponsors events throughout the year. As a result, employees often seek help, and are seldom refused.
At layer 2, management philosophy is about balance and patience – knowing when to grab and let-go – discipline and support, in a parody of strategic planning versus an evolutionary approach. For example, under strategic planning 3M undertakes to manage technology whilst under the evolutionary approach, 3M also allow the technology to influence strategy, growth and direction. Similarly, the company strives to search out customer needs whilst concentrating on its own abilities, and prioritises development whilst encouraging individual initiative. This fosters an air of ‘wackyness’ and unpredictability implied in the R&D and innovation culture discussed at layer 1.
Layer 3 is all about processes. A culture of information sharing between R&D, marketing, and sales competencies is promoted – for example, the marketing wing will allows and encourages R&D to talk directly to customers – as was the case with the development of the Post-it notes.
In terms of managing innovation, several themes are promoted: Under the ‘15% rule’ – perhaps their most famous management principle – any employee (not just those employed in R&D) are allowed to use 15% of their working day concentrating on their own ideas. Further to this, their managers cannot stop them from doing so. Some time management has to overrule in reality, but employees accommodate this willingly. To keep a cage on this the ‘Trials by Fire’ philosophy encourages all ideas to be viewed from a ‘do or die’ perspective – sell it or cease development. However, most 3M employees will tell you that even when managers apply trial by fire, most inventorpreneurs will continue with their development in secret and/or in their own time.
In terms of their ‘Goldilocks’ Principle, 3M managers tend to take the middle-of the road, ‘not too hot, not too cold’ approach in terms of resource allocation, personnel management, promotional activity, etc… ‘Structured Serendipity’ is where managers foster and promote the circulation of ideas throughout the company – all across the world. This provides a forum to share and develop ideas with personnel throughout the company – shown in the example of Spence Silver who’s manager encouraged and supported his presentations of his idea for some 5 years.
Finally, from an HR perspective, 3M seeks out people who personify creativity, who hold broad interests and effective problem-solvers, that are resourceful, self-motivated and energized, and promote a strong work ethic. As an extension to this, 3M unofficially practices and encourages lifelong employment – contrary to the popular vocational ethos of the modern world.